Stocks Slump on H-P Selloff, Bernanke Comments

The markets came under pressure on Tuesday as shares of Hewlett-Packard tumbled and traders responded to commentary from Fed Chairman Ben Bernanke.

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Today's Markets

As of 2:00 p.m. ET, the Dow Jones Industrial Average fell 54.4 points, or 0.42%, to 12742, the S&P 500 dipped 5 points, or 0.36%, to 1382 and the Nasdaq Composite slid 11.9 points, or 0.41%, to 2904.

The Dow and S&P 500 both had their best day since September on Monday, while the Nasdaq posted its best performance on a percent basis since July. The gains were driven by optimism lawmakers will come to a budget solution ahead of the fiscal cliff and a round of solid data on the housing market.

The focus has shifted somewhat to corporate news and world economy on the day.

Hewlett-Packard (NYSE:HPQ) revealed an $8.8 billion charge in its fiscal fourth quarter related to its acquisition of software company Autonomy. More than $5 billion of that charge was linked to "serious accounting improprieties, misrepresentation and disclosure failures discovered by an internal investigation by H-P." H-P said in a statement that it has referred the matter to securities regulators in the U.S. and U.K.

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Still, on an adjusted basis, H-P's quarterly profits came in ahead of expectations. Revenues, however, were shy of Wall Street's view. Shares tumbled more than 10%.

Also on the corporate front, Best Buy (NYSE:BBY) posted a fiscal third-quarter profit of three cents a share, far below estimates of 12 cents. The technology retailer’s sales of $10.75 billion came in slightly above expectations of $10.73 billion.

In European news, Moody's Investors Service sliced France's credit rating to 'Aa1' from 'Aaa,' serving as a reminder that even the eurozone's biggest economies aren't immune to the bloc's debt crisis.

On the economic front, Federal Reserve Chairman Ben Bernanke once again called on Washington to craft a deal that averts the fiscal cliff, saying a failure to do so could cause ‘heavier economic and financial costs’ than the debt debacle last year that roiled markets. He also said in response to a question that he doesn't think the central bank has the tools to buoy the economy if the fiscal cliff is triggered. The markets fell immediately on the remark.

He also reaffirmed the central bank’s pledge to continue taking aggressive policy action until the labor market improves in the context of price stability.

U.S. housing starts rose 3.6% in October to an 894,000-unit rate, well above estimates of an 840,000-unit rate and marking the highest pace since July 2008. Housing permits fell 2.7% to an 866,000-unit rate, slightly ahead of estimates of an 865,000-unit rate.